At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not JOYY Inc. (NASDAQ:YY) makes for a good investment right now.
Is YY a good stock to buy? JOYY Inc. (NASDAQ:YY) was in 31 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. YY has seen an increase in activity from the world’s largest hedge funds of late. There were 28 hedge funds in our database with YY positions at the end of the second quarter. Our calculations also showed that YY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are seen as underperforming, outdated financial tools of the past. While there are over 8000 funds trading at present, Our experts choose to focus on the leaders of this club, about 850 funds. These hedge fund managers have their hands on bulk of the smart money’s total capital, and by tailing their best investments, Insider Monkey has formulated a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a look at the key hedge fund action surrounding JOYY Inc. (NASDAQ:YY).
Do Hedge Funds Think YY Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards YY over the last 21 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Alkeon Capital Management was the largest shareholder of JOYY Inc. (NASDAQ:YY), with a stake worth $122.8 million reported as of the end of September. Trailing Alkeon Capital Management was OZ Management, which amassed a stake valued at $73.3 million. Composite Capital, Sylebra Capital Management, and York Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Composite Capital allocated the biggest weight to JOYY Inc. (NASDAQ:YY), around 15.74% of its 13F portfolio. North Peak Capital is also relatively very bullish on the stock, setting aside 3.61 percent of its 13F equity portfolio to YY.
As aggregate interest increased, key hedge funds have been driving this bullishness. North Peak Capital, managed by Michael Kahan and Jeremy Kahan, assembled the most valuable position in JOYY Inc. (NASDAQ:YY). North Peak Capital had $19 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also made a $6.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Leung Chi Kit’s Kadensa Capital, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as JOYY Inc. (NASDAQ:YY) but similarly valued. We will take a look at Reliance Steel & Aluminum Co. (NYSE:RS), The Interpublic Group of Companies Inc (NYSE:IPG), PRA Health Sciences Inc (NASDAQ:PRAH), Reinsurance Group of America Inc (NYSE:RGA), Encompass Health Corporation (NYSE:EHC), Churchill Downs Incorporated (NASDAQ:CHDN), and Regency Centers Corp (NASDAQ:REG). This group of stocks’ market values match YY’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $536 million in YY’s case. Encompass Health Corporation (NYSE:EHC) is the most popular stock in this table. On the other hand Regency Centers Corp (NASDAQ:REG) is the least popular one with only 23 bullish hedge fund positions. JOYY Inc. (NASDAQ:YY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for YY is 82.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately YY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on YY were disappointed as the stock returned 2.6% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.